BRITISH-AMERICAN ENGINEERING CORPORATION, PLAINTIFF AND APPELLEE, VS. ALTO SURETY AND INSURANCE COMPANY, INCORPORATED, ANTONIO QUIRINO, ET AL., DEFENDANTS AND APPELLANTS.

Appeal taken by the Alto Surety and Insurance Co., Inc. –
hereinafter referred to merely as Alto, Antonio Quirino and Aleli R.
Guzman-Quirino, in their respective capacity as President and
Secretary-Treasurer of said company, from the final judgment of the
Court of First Instance of Manila in Civil Case No. 32209 entitled
“British-American Engineering Corporation vs. Alto Surety &
Insurance Co., Inc., et al.,”.

On April 1, 1957, British-American Engineering Corporation –
hereinafter referred to as appellee – filed the present action in the
Court of First Instance of Manila to compel appellants to issue in its
favor certificates of stock corresponding to 2,500 shares of the
capital stock of Alto, to refund the amount of P99,769.48 representing
cash advances and payments which appellee had allegedly made, with
legal interest from the respective dates they were advanced, plus 30%
of the total amount involved therein as attorney’s fees, and the costs
of suit.

Appellee’s claim was that on April 1, 1947, it paid Alto, through
its Secretary-Treasurer, Mrs. Aleli R. Guzman-Quirino, the sum of
P150,000.00 as purchase price of 1,500 shares of its capital stock at
P100.00 per share (Exhibit A); that again on November 19, 1947 appellee
paid Alto, through the same officer, the sum of P100,084.42 for 1,000
shares of its capital stock at the same par value (Exhibit B); that
despite repeated demands made by appellee, appellants failed or
otherwise refused to issue the corresponding certificates of stock in
its favor.

On the other hand, besides contending that appellee’s cause of
action, if any, had prescribed, appellants claimed that the documents
Exhibits A and B do not represent the true agreement of the parties;
that the amounts mentioned therein were in fact paid for the account of
Antonio Quirino chargeable to his share in the profits realized in his
joint venture with appellee corporation and/or N. R. Lynevitche, its
President and Managing Director, involving the importation and
exportation of heavy equipment and other merchandise done in the name
of appellee in 1946 and 1947.

As far as the record discloses, Alto was formally incorporated on
April 8, 1947. One week prior to that date Mrs. Quirino, acting already
as Secretary-Treasurer of Alto, issued the voucher Exhibit A
acknowledging receipt of the sum of P150,000.00 ostensibly in payment
of 1,500.00 shares of Alto subscribed or purchased by appellee. The
amount, however, was actually credited as payment of the subscriptions
of the original subscribers to the capital stock of Alto as follows:

Name	No. of Shares	Amount Subscribed	Amount Paid Up
Antonio Quirino	5,200	P520,000.00	P130,00.00
Aleli R. Guzman-Quirino	400	40,000.00	10,000.00
Petronila Syquia	200	20,000.00	5,000.00
Tomas Quirino	100	10,000.00	2,500.00
Angela A. Guzman	100	10,000.00	2,500.00
	—————	—————	—————
	6,000	P600,000.00	P150,000.00

Again, on November 19, 1947, a similar voucher Exhibit B was issued
by the Secretary-Treasurer of Alto acknowledging receipt of the sum of
P100,000.00 in payment of 1,000 shares of the capital stock of the
corporation, subscribed or purchased by appellee.

It is not
disputed that the certificates of stock for the initial 1,500 shares
mentioned above were issued in the names of the original subscribers to
the capital stock of Alto, and that the certificates of stock
corresponding to the additional 1,000 shares mentioned heretofore were
issued in the name of the Quirino spouses, within a reasonable time
after April 1, 1947 and November 19 of the same year, respectively.

It appears that Nicolas Lynevitche was not only the President but
also the Managing Director of appellee corporation – virtually the
corporation itself. It is not denied – in fact, it was admitted by
Lynevitche – that appellee, through him, and Antonio Quirino had
embarked upon a joint venture dealing in the importation and
exportation of heavy equipment and other merchandise in which they
realized profits. So closely they worked together that appellee and
Alto – in other words, Lynevitche and Antonio Quirino – held offices in
the same building and had other transactions with each other: Alto, on
different occasions, loaned several amounts to appellee and/or
Lynevitche.

On the other hand, it appears undisputed that appellee never
received any certificate evidencing its alleged considerable and
controlling interest in the capital stock of Alto. Moreover, its first
alleged investment appears to be precisely the total amount subscribed
and paid by the original subscribers to the capital stock of Alto, to
whom, naturally, the corresponding certificates of stock were issued.
And yet, the record discloses that, for a period of almost ten years,
appellee made no inquiry as to why no certificate of stock had been
issued in its name; much less did it demand issuance thereof in its
name or an accounting in connection with the business of Alto and the
profits derived therefrom. The record shows in this connection that it
was only on October 25, 1956 when Lynevitche made a personal demand
upon the Quirinos, while appellee corporation made a similar demand
only on December 24, 1956. In fact, the present action was filed only
on April 1, 1957 the very last day of the period of prescription.

The foregoing, We believe, affords more than sufficient ground for
concluding that during that period of almost ten years, appellee knew
that certificates corresponding to the shares of stock of Alto
allegedly purchased by it had been issued in the name of the Quirino
spouses and other parties. Whether or not its apparent acquiescence to
this situation was due to the fact that the total sum of P250,000.00
covered by the vouchers mentioned heretofore really represented a
partial payment of the share of Antonio Quirino in the profits realized
by his joint venture with appellee – profits admitted unconditionally
by Lynevitche himself – is a matter we do not here decide because the
Quirinos are not parties in their personal capacity.

This appeal, therefore, must be decided upon another ground.

As stated heretofore, appellee commenced this action to compel Alto
to issue in its favor certificates of stock corresponding to the 2,500
shares it had allegedly purchased. Its complaint said so (prayer for
relief, paragraph A); its representation said so during the trial
(transcript of September 1, 1959 pp. 16-17), and the trial court, in
the opening paragraph of its decision quoted in appellee’s brief
submitted by Attys. David and Gunigundo, says exactly the same thing:
that the action was for judgment against Alto ordering it to issue in
favor of appellee certificates of stock corresponding to 2,500 shares
of its capital stock. Finally, because the action was precisely for
that purpose, the appealed judgment is as follows:

“WHEREFORE, judgment is hereby rendered in favor of
the plaintiff and against the defendants ordering the defendant Alto
Surety & Insurance Co., Inc. to issue in favor of the plaintiff the
certificates of stock corresponding to TWO THOUSAND FIVE HUNDRED
(2,500) shares of its capital stock.”

It is at once obvious that the judgment quoted above, if carried
out, would result in a situation anomalous and illegal because it would
give rise to a situation where 2,500 shares of Alto in the name of the
Quirinos would remain outstanding – because said judgment did not
provide for their nullification and cancellation -, and another 2,500
shares would be in the name of appellee, all of them of a total par
value of P500,000.00 while what had been actually paid for them was
only one-half of said amount.

Moreover, as Alto had actually issued certificates of stock
corresponding to the P250,000.00 paid into its coffers, and the
issuance of the corresponding certificates in the name of the Quirinos
and other parties was, if not consented to by appellee, impliedly
ratified by it, it is clear that Alto had no further obligation to
perform in the premises, appellee’s cause of action, if any, being
exclusively against the parties in whose names the certificates of
stock in question were issued. As a matter of fact, if no certificate
had been issued at all by Alto and the right to the shares had been the
subject of adverse claims on the part of appellee and the Quirinos, the
matter could have been a proper subject of interpleading. But upon the
facts before Us, appellee’s right to relief could be only against the
parties in whose names the certificates were issued. This relief could
not have been granted by the lower court – as in fact it was not –
because the Quirinos were made parties in this case in their capacity
as officers of Alto, and other persons in whose names a few
certificates of share were issued were not made parties at all.

WHEREFORE, the decision appealed from is reversed, with the result that the present case is dismissed, with costs.

Concepcion, C.J., Reyes, J.B.L., Barrera, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, and Ruiz Castro, JJ., concur.
Regala, J., no part.